Like most people, you’re probably interested in leaving the 9-to-5 grind behind, along with demanding supervisors, in order to become your own boss. And you may find the prospect of buying a laundromat appealing because of the relative ease of owning and operating such a low-maintenance facility. However, like any business, there are things you need to be aware of before you sign on the dotted line. Here are some factors to consider before you buy.
- It’s a cash business. The main reason it is important to understand this from the get-go is that it can make the process of verifying income difficult, to say the least. Credit cards leave a paper trail – cash does not. When customers are pumping quarters into washers and dryers and the owners are collecting it, you have no real way of knowing how much income the business is actually earning. That said, knowing up-front that the numbers you see might not be accurate, you can find ways to figure out whether or not investing in a laundromat is the right business move for you.
- Methods of determining income. There are several well-established means of determining accurate income for an existing cash business, and for laundromats in particular, although you’ll probably want to review several data sets to get a good overview of your prospects. You will first want to ask to see the current owner’s records charting income and expenses. You can also review water bills (to get an idea of how much water customers are consuming, allowing you to calculate the business coming in). And if the owner is willing, you may even be able to review income tax records for the business. Although an owner may claim more profits in order to entice buyers for the business, it is extremely unlikely that they’ll claim more than they actually earned on their annual tax returns.
- Check out the competition. It’s important to understand your market and your competition before you buy into an existing laundromat. For starters, you want to make sure there is an abundance of multi-unit dwellings (namely apartments) in your area since single-family homes nearly always have hook-ups for a washer and dryer. But you should also check if apartment buildings in the area offer on-site laundry facilities. And from there you need to seek out other laundromats in the area. Just don’t forget to exercise due diligence by spending some time at the facility you’re looking to buy in order to see how busy it is.
- Request a joint collection period. One option that many prospective buyers pursue when considering the purchase of a coin laundry is requesting a period of time during which they collect income with the current owners in order to see what kind of money is coming in. Unfortunately, it’s not outside the realm of possibility that the owners could be adding coins to their machines during this process in order to make you think they’re earning more than they actually are. But when paired with other forms of review you can probably spot trends that can help you to form a more accurate estimate of income.
- Hire an experience broker. When looking at laundromats for sale, you can certainly go it alone thinking you’ll save some money by avoiding the cost of a broker. But this could end up being a much more costly mistake. With an experienced agent on your side you stand a much better chance of making an accurate assessment of an existing business, not to mention negotiating a fair deal.